Apple Prepping Pay-By-Phone Chip For New iPhone This Year?

You’ll be hearing a lot more about NFC—near field communication—this year, as more and more cell phone manufacturers add NFC chips to their handsets. It’s basically a way to use your phone at a tap-to-pay credit card machine used by various retail stores. You may already have tap-to-pay built into one or more of your debit or credit cards, whether you know it or not.

Bloomberg is confidently forecasting that the next iPhone will have an NFC chip inside it, citing a guy who runs a consulting firm who cited unnamed “engineers who are working on hardware for the Apple project.”

So take the information with a grain of salt, even though it’d make plenty of sense for Apple to get on the NFC bandwagon. Google’s latest Nexus S phone has an NFC chip inside it, and it came out at the end of last year. Several Nokia handsets have had the chips for years now, too.

While adding NFC chips to phones is relatively trivial, the bigger issue becomes how to process payments initiated from the handsets. Big credit card companies such as Visa and Mastercard are obvious choices due to their sheer footprints in the U.S., but they charge percentages to merchants for each transaction that’s processed.

If Apple wanted to build out its own payment network, as the Bloomberg article suggests it might do, it could offer lower transaction fees to businesses and let iPhone owners draw from existing iTunes balances or outside financial institutions such as Paypal or their checking accounts. It could also partner with wireless carriers to draw funds against customers’ bills.

The potential downside is that such systems could be cumbersome to implement on the merchant’s end and may cause confusion to consumers—multiple point of sale systems, this one’s iPhone compatible, this one’s Android compatible, this one’s for credit cards, etc.—though it probably wouldn’t take long to develop universally-compatible checkout systems.

The article also posits that the next iPad could get its own NFC chip as well. Yes, a 10-inch tablet that you can use to pay for stuff. It seems totally unnecessary but, again, the technology’s relatively trivial to implement.